UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.
Class |
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Outstanding as of April 28, 2023 |
Common Stock, $0.01 par value |
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
Page 2 of 36
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED BALANCE SHEETS
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March 31, |
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December 31, |
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2023 |
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2022 |
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(In Millions, Except Par Value Data) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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Restricted cash |
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Restricted investments (to satisfy discharged debt and related interest) |
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Accounts receivable, net |
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Inventories, net |
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Current assets held for sale |
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Other current assets |
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Total Current Assets |
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Property, plant and equipment |
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Allowances for depreciation, depletion and amortization |
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Net property, plant and equipment |
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Goodwill |
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Other intangibles, net |
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Operating lease right-of-use assets, net |
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Noncurrent assets held for sale |
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Other noncurrent assets |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued salaries, benefits and payroll taxes |
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Accrued other taxes |
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Accrued interest |
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Current maturities of discharged long-term debt |
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Operating lease liabilities |
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Current liabilities held for sale |
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Other current liabilities |
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Total Current Liabilities |
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Long-term debt |
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Deferred income taxes, net |
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Noncurrent operating lease liabilities |
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Noncurrent liabilities held for sale |
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Other noncurrent liabilities |
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Total Liabilities |
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Equity: |
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Common stock, par value $ |
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Preferred stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Total Shareholders' Equity |
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Noncontrolling interests |
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Total Equity |
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Total Liabilities and Equity |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements.
Page 3 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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(In Millions, Except Per Share Data) |
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Total Revenues |
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$ |
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$ |
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Total Cost of Revenues |
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Gross Profit |
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Selling, general and administrative expenses |
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Acquisition and integration expenses |
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Other operating expenses (income), net |
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Earnings from Operations |
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Interest expense |
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Other nonoperating income, net |
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Earnings from continuing operations before income tax expense |
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Income tax expense |
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Earnings from continuing operations |
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Loss from discontinued operations, net of income tax benefit |
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Consolidated net earnings |
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Less: Net earnings (loss) attributable to noncontrolling interests |
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Net Earnings Attributable to Martin Marietta |
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$ |
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$ |
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Consolidated Comprehensive Earnings (Loss): |
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Earnings (Loss) attributable to Martin Marietta |
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$ |
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$ |
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Earnings (Loss) attributable to noncontrolling interests |
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$ |
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$ |
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Net Earnings (Loss) Attributable to Martin Marietta |
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Per Common Share: |
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Basic from continuing operations attributable to common |
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$ |
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$ |
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Basic from discontinued operations attributable to |
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$ |
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$ |
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Diluted from continuing operations attributable to common |
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$ |
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$ |
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Diluted from discontinued operations attributable to |
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$ |
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$ |
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Weighted-Average Common Shares Outstanding: |
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Basic |
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Diluted |
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See accompanying notes to the consolidated financial statements.
Page 4 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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(Dollars in Millions) |
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Cash Flows from Operating Activities: |
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Consolidated net earnings |
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$ |
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$ |
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Adjustments to reconcile consolidated net earnings to net cash |
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Depreciation, depletion and amortization |
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Stock-based compensation expense |
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Gains on sales of assets |
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Deferred income taxes, net |
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Other items, net |
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( |
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Changes in operating assets and liabilities, net of effects of |
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Accounts receivable, net |
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Inventories, net |
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( |
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Accounts payable |
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Other assets and liabilities, net |
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Net Cash Provided by Operating Activities |
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Cash Flows from Investing Activities: |
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Additions to property, plant and equipment |
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Acquisitions, net of cash acquired |
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Proceeds from sales of assets |
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Investments in life insurance contracts, net |
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Other investing activities, net |
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Net Cash Used for Investing Activities |
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Cash Flows from Financing Activities: |
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Payments on finance lease obligations |
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Dividends paid |
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Repurchases of common stock |
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Proceeds from exercise of stock options |
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Shares withheld for employees’ income tax obligations |
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( |
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Net Cash Used for Financing Activities |
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( |
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Net Decrease in Cash, Cash Equivalents and Restricted Cash |
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Cash, Cash Equivalents and Restricted Cash, beginning of period |
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Cash, Cash Equivalents and Restricted Cash, end of period |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements.
Page 5 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
(UNAUDITED) CONSOLIDATED STATEMENTS OF TOTAL EQUITY
(In Millions, Except Per Share Data) |
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Shares of Common Stock |
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Common Stock |
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Additional Paid-in Capital |
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Accumulated |
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Retained Earnings |
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Total Shareholders' Equity |
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Noncontrolling Interests |
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Total Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Consolidated net earnings (loss) |
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— |
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— |
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— |
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— |
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( |
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Other comprehensive loss, |
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— |
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— |
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— |
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( |
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— |
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( |
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— |
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Dividends declared ($ |
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— |
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— |
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— |
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— |
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( |
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( |
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— |
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Issuances of common stock for stock |
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— |
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— |
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— |
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— |
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Shares withheld for employees' |
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— |
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— |
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( |
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— |
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— |
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( |
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— |
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( |
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Repurchases of common stock |
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( |
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— |
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— |
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— |
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( |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Consolidated net earnings |
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— |
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— |
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— |
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— |
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Other comprehensive earnings, |
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— |
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— |
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— |
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— |
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— |
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Dividends declared ($ |
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— |
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— |
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— |
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— |
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( |
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( |
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— |
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( |
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Issuances of common stock for stock |
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— |
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— |
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— |
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— |
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Shares withheld for employees' |
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— |
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— |
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( |
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— |
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— |
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( |
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— |
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( |
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Repurchases of common stock |
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( |
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— |
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— |
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— |
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( |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements.
Page 6 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Organization
Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. As of March 31, 2023, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately
The Company’s Building Materials business includes
BUILDING MATERIALS BUSINESS (continuing operations only) |
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Reportable Segments |
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East Group |
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West Group |
Operating Locations |
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Alabama, Florida, Georgia, Indiana, |
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Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah,
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Product Lines |
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Aggregates and Asphalt |
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Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving |
The Company’s Magnesia Specialties business, which represents a separate reportable segment, has manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications, and dolomitic lime sold primarily to customers for steel production and soil stabilization.
Basis of Presentation and Use of Estimates
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and in Article 10 of Regulation S-X. The Company has continued to follow the accounting policies set forth in the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, the interim consolidated financial information provided herein reflects all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations, financial position
Page 7 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
and cash flows for the interim periods. The consolidated results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results expected for other interim periods or the full year. The consolidated balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The preparation of the Company’s consolidated financial statements requires management to make certain estimates and assumptions about future events. As future events and their effects cannot be fully determined with precision, actual results could differ significantly from estimates. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs.
Revenue Recognition
Total revenues include sales of products and services to customers, net of discounts or allowances, if any, and freight and delivery costs billed to customers. Product revenues are recognized when control of the promised good is transferred to unaffiliated customers, typically when finished products are shipped. Intersegment and interproduct revenues are eliminated in consolidation. Service revenues are derived from the paving business and are recognized using the percentage-of-completion method under the cost-to-cost approach. When the Company arranges third-party freight to deliver products to customers, the Company has elected the delivery to be a fulfillment activity rather than a separate performance obligation. Further, the Company acts as a principal in the delivery arrangements and, as required by Accounting Standards Codification (ASC) 606, the related revenues and costs are presented gross in the consolidated statements of earnings and are recognized consistently with the timing of the product revenues.
Restricted Cash
At March 31, 2023 and December 31, 2022, the Company had restricted cash of $
The statements of cash flows reflect cash flow changes and balances for cash, cash equivalents and restricted cash on an aggregated basis.
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Restricted Investments
At March 31, 2023 and December 31, 2022, the Company had $
Page 8 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
the Company’s $
Consolidated Comprehensive Earnings (Loss) and Accumulated Other Comprehensive Loss
Consolidated comprehensive earnings (loss) consist of consolidated net earnings, adjustments for the funded status of pension and postretirement benefit plans and foreign currency translation adjustments, and are presented in the Company’s consolidated statements of earnings and comprehensive earnings.
Consolidated comprehensive earnings (loss) attributable to Martin Marietta is as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Net earnings attributable to Martin Marietta |
|
$ |
|
|
$ |
|
||
Other comprehensive earnings (loss), net of tax |
|
|
|
|
|
( |
) |
|
Consolidated comprehensive earnings (loss) attributable to |
|
$ |
|
|
$ |
( |
) |
|
Accumulated other comprehensive loss consists of unrecognized gains and losses related to the funded status of the pension and postretirement benefit plans and foreign currency translation and is presented on the Company’s consolidated balance sheets.
Page 9 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The components of the changes in accumulated other comprehensive loss, net of tax, are as follows:
|
|
(Dollars in Millions) |
|
|||||||||
|
|
Pension and |
|
|
Foreign Currency |
|
|
Accumulated |
|
|||
|
|
Three Months Ended March 31, 2023 |
|
|||||||||
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive earnings before reclassifications, |
|
|
— |
|
|
|
|
|
|
|
||
Amounts reclassified from accumulated other |
|
|
|
|
|
— |
|
|
|
|
||
Other comprehensive earnings, net of tax |
|
|
|
|
|
|
|
|
|
|||
Balance at end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|||
|
|
Three Months Ended March 31, 2022 |
|
|||||||||
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive (loss) earnings before reclassifications, |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amounts reclassified from accumulated other |
|
|
|
|
|
— |
|
|
|
|
||
Other comprehensive (loss) earnings, net of tax |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance at end of period |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
The $
Changes in net noncurrent deferred tax assets related to accumulated other comprehensive loss are as follows:
|
|
Pension and Postretirement Benefit Plans |
|
|||||
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Tax effect of other comprehensive (earnings) loss |
|
|
( |
) |
|
|
|
|
Balance at end of period |
|
$ |
|
|
$ |
|
||
Page 10 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Reclassifications out of accumulated other comprehensive loss are as follows:
|
|
Three Months Ended |
|
|
Affected line items in the |
|||||
|
|
March 31, |
|
|
consolidated statements of earnings |
|||||
|
|
2023 |
|
|
2022 |
|
|
and comprehensive earnings |
||
|
|
(Dollars in Millions) |
|
|||||||
Pension and postretirement |
|
|
|
|
|
|
|
|
||
Amortization of: |
|
|
|
|
|
|
|
|
||
Prior service cost |
|
$ |
|
|
$ |
|
|
|
||
Actuarial loss |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
Other nonoperating income, net |
||
Tax effect |
|
|
( |
) |
|
|
( |
) |
|
Income tax expense |
Total |
|
$ |
|
|
$ |
|
|
|
||
Earnings per Common Share
The numerator for basic and diluted earnings per common share is net earnings attributable to Martin Marietta, reduced by dividends and undistributed earnings attributable to certain of the Company’s stock-based compensation arrangements. If there is a net loss, no amount of the undistributed loss is attributed to unvested participating securities. The denominator for basic earnings per common share is the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed assuming that the weighted-average number of common shares is increased by the conversion, using the treasury stock method, of awards to be issued to employees and nonemployee members of the Company’s Board of Directors under certain stock-based compensation arrangements if the conversion is dilutive. For the three months ended March 31, 2023 and 2022, the diluted per-share computations reflect the number of common shares outstanding including the number of additional shares that would have been outstanding if the potentially dilutive common shares had been issued.
The following table reconciles the denominator for basic and diluted earnings from continuing operations per common share:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(In Millions) |
|
|||||
Basic weighted-average common shares outstanding |
|
|
|
|
|
|
||
Effect of dilutive employee and director awards |
|
|
|
|
|
|
||
Diluted weighted-average common shares outstanding |
|
|
|
|
|
|
||
Reclassifications
As of March 31, 2023, the Company combined products and services revenues and freight revenues into total revenues, and combined cost of revenues - products and services and cost of revenues - freight into total cost of revenues on the Company's consolidated statements of earnings and comprehensive earnings. Prior-year information has been reclassified to conform to the current-year presentation. The reclassifications had no impact on the Company’s previously reported results of operations, financial position or cash flows.
Page 11 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Discontinued Operations
For the three months ended March 31, 2023 and 2022, discontinued operations included the Company's Tehachapi, California cement plant, related cement distribution terminals, California cement import operations and California ready mixed concrete businesses. Discontinued operations as of March 31, 2022 also included the Company's Redding, California cement plant, related cement distribution terminals and
Financial results for the Company's discontinued operations are as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Total revenues |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Pretax loss |
|
$ |
( |
) |
|
$ |
( |
) |
Income tax benefit |
|
|
( |
) |
|
|
( |
) |
Loss from discontinued operations, net of income tax benefit |
|
$ |
( |
) |
|
$ |
( |
) |
Total cash used for operating and investing activities for discontinued operations was $
Assets and Liabilities Held for Sale
Assets and liabilities held for sale at March 31, 2023 and December 31, 2022 included a cement plant in Tehachapi, California; related cement distribution terminals; the California cement import operations; the California ready mixed concrete plants not sold as part of the Redding transaction; and certain investment properties.
Page 12 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Assets and liabilities held for sale are as follows:
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
|
|
Continuing Operations |
|
|
Discontinued Operations |
|
|
Total |
|
|
Continuing Operations |
|
|
Discontinued Operations |
|
|
Total |
|
||||||
|
|
(Dollars in Millions) |
|
|||||||||||||||||||||
Inventories, net |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
Investment land |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Other assets |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Total current assets held for sale |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Property, plant and equipment |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
Intangible assets, excluding goodwill |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Operating lease right-of-use assets |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Goodwill |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Valuation allowance for loss on sale |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total noncurrent assets held for sale |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lease obligations |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
Total current liabilities held for sale |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lease obligations |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
Asset retirement obligations |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total noncurrent liabilities held for sale |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Finished products |
|
$ |
|
|
$ |
|
||
Products in process |
|
|
|
|
|
|
||
Raw materials |
|
|
|
|
|
|
||
Supplies and expendable parts |
|
|
|
|
|
|
||
Total inventories |
|
|
|
|
|
|
||
Less: Allowances |
|
|
( |
) |
|
|
( |
) |
Inventories, net |
|
$ |
|
|
$ |
|
||
Page 13 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Total debt |
|
|
|
|
|
|
||
Less: current maturities |
|
|
( |
) |
|
|
( |
) |
Long-term debt |
|
$ |
|
|
$ |
|
||
On September 29, 2022, the Company satisfied and discharged the 2023 Notes. In connection with the satisfaction and discharge, the Company irrevocably deposited funds with Regions Bank, as trustee under the indenture governing the 2023 Notes, in an amount sufficient to satisfy all remaining principal and interest payments on the 2023 Notes. Holders of the 2023 Notes will receive payment of principal on the scheduled maturity date of the 2023 Notes and payment of interest at the per annum rate (and on the dates) set forth in the 2023 Notes indenture. The Company utilized existing cash resources to fund the satisfaction and discharge. As a result of the satisfaction and discharge of the 2023 Notes, the obligations of the Company under the indenture with respect to the 2023 Notes have been terminated, except those provisions of the indenture that, by their terms, survive the satisfaction and discharge. Because the discharge did not represent a legal defeasance, the 2023 Notes remain on the Company’s consolidated balance sheets at March 31, 2023 and December 31, 2022 and will continue to accrete to their par value over the period until maturity in July 2023. Additionally, the related trust assets are included in Restricted investments (to satisfy discharged debt and related interest) on the Company’s consolidated balance sheets at March 31, 2023 and December 31, 2022.
The Company has a credit agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, Deutsche Bank Securities, Inc., PNC Bank, Truist Bank and Wells Fargo Bank, N.A., as Syndication Agents, and the lenders party thereto (the Credit Agreement), which provides for a $
The Credit Agreement requires the Company’s ratio of consolidated net debt-to-consolidated earnings before interest, taxes, depreciation, depletion and amortization (EBITDA), as defined by the Revolving Facility, for the trailing-twelve months (the Ratio) to not exceed
Page 14 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
from the Ratio any debt incurred in connection with certain acquisitions during the quarter or three preceding quarters so long as the Ratio calculated without such exclusion does not exceed
The Company, through a wholly-owned special-purpose subsidiary, has a $
The Company’s financial instruments include temporary cash investments, restricted cash, restricted investments, accounts receivable, notes receivable, accounts payable, publicly-registered long-term notes, debentures and other long-term debt.
Temporary cash investments are placed primarily in money market funds, money market demand deposit accounts and Eurodollar time deposit accounts with financial institutions. The Company’s cash equivalents have maturities of less than three months. Due to the short maturity of these investments, they are carried on the consolidated balance sheets at cost, which approximates fair value.
Restricted cash is held in a trust account with a third-party intermediary. Due to the short-term nature of this account, the carrying value of restricted cash approximates its fair value.
Restricted investments are held in a fund that invests solely in U.S. Treasury securities. The estimated fair value of the fund is valued at net asset value, which the fund seeks to maintain at one dollar per share. As such, the carrying value of the restricted investments approximates its fair value. The Company is restricted from accessing the investments, which will be used to settle the 2023 Notes and related interest payments. Investment returns on those trust assets are for the account of the Company if there are any after satisfaction of all amounts payable in connection with the 2023 Notes.
Accounts receivable are due from a large number of customers, primarily in the construction industry, and are dispersed across wide geographic and economic regions.
Page 15 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Notes receivable are primarily promissory notes with customers and are not publicly traded. Management estimates that the carrying value of notes receivable approximates its fair value.
Accounts payable represent amounts owed to suppliers and vendors. The estimated carrying value of accounts payable approximates its fair value due to the short-term nature of the payables.
The carrying values and fair values of the Company’s long-term debt were $
The effective income tax rate reflects the effect of federal and state income taxes on earnings and the impact of differences in book and tax accounting arising primarily from the permanent tax benefits associated with the statutory depletion deduction for mineral reserves. The effective income tax rates for continuing operations were
The net periodic benefit cost (credit) for pension and postretirement benefits includes the following components:
|
|
Pension |
|
|
Postretirement Benefits |
|
||||||||||
|
|
Three Months Ended March 31, |
|
|||||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
|
|
(Dollars in Millions) |
|
|||||||||||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on assets |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Amortization of: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Prior service cost (credit) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Actuarial loss (gain) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Net periodic benefit cost (credit) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
The components of net periodic benefit cost (credit), other than service cost, are included in the line item Other nonoperating income, net, in the consolidated statements of earnings and comprehensive earnings. Based on the roles of the employees, service cost is included in Cost of revenues or Selling, general and administrative expenses line items in the consolidated statements of earnings and comprehensive earnings.
Legal and Administrative Proceedings
The Company is engaged in certain legal and administrative proceedings incidental to its normal business activities, including matters relating to environmental protection. The Company considers various factors in assessing the probable outcome of each matter, including but not limited to the nature of existing legal proceedings and claims, the asserted or possible damages, the jurisdiction and venue of the case and whether it is a jury trial, the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, the Company’s experience
Page 16 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
in similar cases and the experience of other companies, the facts available to the Company at the time of assessment, and how the Company intends to respond to the proceeding or claim. The Company’s assessment of these factors may change over time as proceedings or claims progress. The Company believes the probability is remote that the outcome of any currently pending legal or administrative proceeding will result in a material loss to the Company as a whole, based on currently available facts.
Letters of Credit
In the normal course of business, the Company provides certain third parties with standby letter of credit agreements guaranteeing its payment for certain insurance claims, contract performance and permit requirements. At March 31, 2023, the Company was contingently liable for $
Borrowing Arrangements with Affiliate
The Company is a guarantor with an unconsolidated affiliate for a $
In addition, the Company has a $
The Building Materials business contains
The following table displays selected financial data for the Company’s reportable segments. Total revenues, as presented on the consolidated statements of earnings and comprehensive earnings, reflect the elimination of intersegment revenues, which represent sales from one segment to another segment. Total revenues and earnings (loss) from operations reflect continuing operations only.
Page 17 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Total revenues: |
|
|
|
|
|
|
||
East Group |
|
$ |
|
|
$ |
|
||
West Group |
|
|
|
|
|
|
||
Total Building Materials business |
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Earnings (Loss) from operations: |
|
|
|
|
|
|
||
East Group |
|
$ |
|
|
$ |
|
||
West Group |
|
|
|
|
|
|
||
Total Building Materials business |
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
||
Corporate |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
Performance Obligations. Performance obligations are contractual promises to transfer or provide a distinct good or service for a stated price. The Company’s product sales agreements are single-performance obligations that are satisfied at a point in time.
Future revenues from unsatisfied performance obligations at March 31, 2023 and 2022 were $
Service Revenues. Service revenues, which include paving services located in California and Colorado, were $
Contract Balances. Costs in excess of billings relate to the conditional right to consideration for completed contractual performance and are contract assets on the consolidated balance sheets. Costs in excess of billings are reclassified to accounts receivable when the right to consideration becomes unconditional. Billings in excess of costs relate to customers invoiced in advance of contractual performance and are contract liabilities on the consolidated balance sheets.
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Costs in excess of billings |
|
$ |
|
|
$ |
|
||
Billings in excess of costs |
|
$ |
|
|
$ |
|
||
Page 18 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Revenues recognized from the beginning balance of contract liabilities for the three months ended March 31, 2023 and 2022 were $
Retainage, which primarily relates to the paving services, represents amounts that have been billed to customers but payment withheld until final acceptance of the performance obligation by the customer. Retainage, which is included in Other current assets on the Company’s consolidated balance sheets, was $
The following table, which is reconciled to consolidated amounts, provides total revenues and gross profit (loss) by line of business: Building Materials (further divided by product line) and Magnesia Specialties. Interproduct revenues represent sales from the aggregates product line to the ready mixed concrete and asphalt and paving product lines and sales from the cement product line to the ready mixed concrete product line. Total revenues and gross profit (loss) reflect continuing operations only.
|
|
Three Months Ended |
|
|
|||||
|
|
March 31, |
|
|
|||||
|
|
2023 |
|
|
2022 |
|
|
||
|
|
(Dollars in Millions) |
|||||||
Total revenues: |
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
|
|
$ |
|
|
||
Cement |
|
|
|
|
|
|
|
||
Ready mixed concrete |
|
|
|
|
|
|
|
||
Asphalt and paving services |
|
|
|
|
|
|
|
||
Less: interproduct revenues |
|
|
( |
) |
|
|
( |
) |
|
Total Building Materials business |
|
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
||
|
|
|
|
|
|
|
|
||
Gross profit (loss): |
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
|
|
$ |
|
|
||
Cement |
|
|
|
|
|
|
|
||
Ready mixed concrete |
|
|
|
|
|
|
|
||
Asphalt and paving services |
|
|
( |
) |
|
|
( |
) |
|
Total Building Materials business |
|
|
|
|
|
|
|
||
Magnesia Specialties |
|
|
|
|
|
|
|
||
Corporate |
|
|
|
|
|
( |
) |
|
|
Total |
|
$ |
|
|
$ |
|
|
||
Page 19 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Noncash investing and financing activities are as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Accrued liabilities for purchases of property, plant and equipment |
|
$ |
|
|
$ |
|
||
Remeasurement of operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Remeasurement of finance lease right-of-use assets |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for new |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for |
|
$ |
|
|
$ |
|
||
Acquisition of assets through asset exchange |
|
$ |
|
|
$ |
|
||
Supplemental disclosures of cash flow information are as follows:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Cash paid for interest, net of capitalized amount |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes, net of refunds |
|
$ |
|
|
$ |
|
||
On April 26, 2023, the Company terminated its agreement with CalPortland Company regarding the sale of the Company’s Tehachapi, California cement plant and related distribution terminals to CalPortland in light of the parties being unable to timely obtain the necessary approval by the U.S. Federal Trade Commission. The Company intends to explore the potential sale of Tehachapi to other buyers. On May 3, 2023, the Company divested its cement import operations in California. Since October 1, 2021, these cement businesses have been classified as assets held for sale on the Company’s consolidated balance sheet; the associated financial results have been reported as discontinued operations on the consolidated statement of earnings.
Page 20 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW
Martin Marietta Materials, Inc. (the Company or Martin Marietta) is a natural resource-based building materials company. As of March 31, 2023, the Company supplies aggregates (crushed stone, sand and gravel) through its network of approximately 350 quarries, mines and distribution yards in 28 states, Canada and The Bahamas. Martin Marietta also provides cement and downstream products, namely, ready mixed concrete, asphalt and paving services, in certain vertically-integrated structured markets where the Company has a leading aggregates position. In addition, the Company has one cement plant, related cement distribution terminals, cement import operations and ready mixed concrete operations in California that are classified as assets held for sale and reported as discontinued operations as of and for the three months ended March 31, 2023 and 2022. The Company’s heavy-side building materials are used in infrastructure, nonresidential and residential construction projects. Aggregates are also used in agricultural, utility and environmental applications and as railroad ballast. The aggregates, cement, ready mixed concrete and asphalt and paving product lines are reported collectively as the “Building Materials” business.
The Company’s Building Materials business includes two reportable segments: the East Group and the West Group.
BUILDING MATERIALS BUSINESS (continuing operations only) |
||||
Reportable Segments |
|
East Group |
|
West Group |
Operating Locations |
|
Alabama, Florida, Georgia, Indiana, Iowa, |
|
Arizona, Arkansas, California, Colorado, Louisiana, Oklahoma, Texas, Utah, |
|
|
|||
Product Lines |
|
Aggregates and Asphalt |
|
Aggregates, Cement, Ready Mixed Concrete, Asphalt and Paving Services |
|
|
|||
Facility Types |
|
Quarries, Mines, Asphalt Plants and Distribution Facilities |
|
Quarries, Cement Plants, Asphalt Plants, Ready Mixed Concrete Plants and Distribution Facilities |
|
|
|||
Modes of Transportation |
|
Truck, Railcar, Ship and Barge |
|
Truck and Railcar |
The Building Materials business is significantly affected by weather patterns, seasonal changes and other climate-related conditions. Production and shipment levels for aggregates, cement, ready mixed concrete and asphalt materials correlate with general construction activity levels, most of which occur in the spring, summer and fall. Thus, production and shipment levels vary by quarter. Operations concentrated in the northern and midwestern United States generally experience more severe winter weather conditions than operations in the Southeast, Southwest and West. Excessive rainfall, and conversely excessive drought, can also jeopardize production, shipments and profitability in all markets served by the Company. Due to the potentially significant impact of weather on the Company’s operations, current-period results are not necessarily indicative of expected performance for other interim periods or the full year.
The Company has a Magnesia Specialties business with manufacturing facilities in Manistee, Michigan, and Woodville, Ohio. The Magnesia Specialties business produces magnesia-based chemicals products used in industrial, agricultural and environmental applications and dolomitic lime sold primarily to customers in the steel and mining industries.
Page 21 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
CRITICAL ACCOUNTING POLICIES
The Company outlined its critical accounting policies in its Annual Report on Form 10-K for the year ended December 31, 2022. There were no changes to the Company’s critical accounting policies during the three months ended March 31, 2023.
RESULTS OF OPERATIONS
Earnings from continuing operations before interest; income taxes; depreciation, depletion and amortization; earnings/loss from nonconsolidated equity affiliates; and acquisition and integration expenses (Adjusted EBITDA) is an indicator used by the Company and investors to evaluate the Company’s operating performance from period to period. Adjusted EBITDA is not defined by accounting principles generally accepted in the United States (GAAP) and, as such, should not be construed as an alternative to net earnings attributable to Martin Marietta, earnings from operations or operating cash flow. However, the Company’s management believes that Adjusted EBITDA may provide additional information with respect to the Company’s performance and is a measure used by management to evaluate the Company’s performance. Since Adjusted EBITDA excludes some, but not all, items that affect net earnings and may vary among companies, Adjusted EBITDA as presented by the Company may not be comparable with similarly titled measures of other companies.
The following table presents a reconciliation of net earnings from continuing operations attributable to Martin Marietta to Adjusted EBITDA:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Net earnings from continuing operations attributable to Martin Marietta |
|
$ |
134.3 |
|
|
$ |
24.5 |
|
Add back: |
|
|
|
|
|
|
||
Interest expense, net of interest income |
|
|
31.6 |
|
|
|
40.5 |
|
Income tax expense for controlling interests |
|
|
35.5 |
|
|
|
5.9 |
|
Depreciation, depletion and amortization expense and |
|
|
121.7 |
|
|
|
124.9 |
|
Acquisition and integration expenses |
|
|
0.8 |
|
|
|
1.4 |
|
Adjusted EBITDA |
|
$ |
323.9 |
|
|
$ |
197.2 |
|
Mix-adjusted average selling price (mix-adjusted ASP) is a non-GAAP measure that excludes the impacts of period-over-period product, geographic and other mix on average selling price. Mix-adjusted ASP is calculated by comparing current-period shipments to like-for-like shipments in the comparable prior period. Management uses this metric to evaluate the realization of pricing increases and believes this information is useful to investors as it provides same-on-same pricing trends. The following reconciles reported average selling price to mix-adjusted ASP and corresponding variances:
Page 22 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Aggregates: |
|
|
|
|
|
|
||
Reported average selling price |
|
$ |
19.83 |
|
|
$ |
16.17 |
|
Adjustment for impact of product, geographic |
|
|
(0.50 |
) |
|
|
|
|
Mix-adjusted ASP |
|
$ |
19.33 |
|
|
|
|
|
|
|
|
|
|
|
|
||
Reported average selling price variance |
|
|
22.6 |
% |
|
|
|
|
Mix-adjusted ASP variance |
|
|
19.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
||
Cement - Continuing Operations: |
|
|
|
|
|
|
||
Reported average selling price |
|
$ |
170.65 |
|
|
$ |
129.11 |
|
Adjustment for impact of product, geographic |
|
|
(0.38 |
) |
|
|
|
|
Mix-adjusted ASP |
|
$ |
170.27 |
|
|
|
|
|
|
|
|
|
|
|
|
||
Reported average selling price variance |
|
|
32.2 |
% |
|
|
|
|
Mix-adjusted ASP variance |
|
|
31.9 |
% |
|
|
|
|
Quarter Ended March 31, 2023
Financial highlights for the quarter ended March 31, 2023 (unless noted, all comparisons are versus the prior-year quarter and for continuing operations):
The following tables present total revenues and gross profit (loss) for the Company and its reportable segments by product line for continuing operations for the three months ended March 31, 2023 and 2022. In each case, the data is stated as a percentage of revenues of the Company or the relevant segment or product line, as the case may be.
Page 23 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
|
|
Three Months Ended March 31, |
||||||||||
|
|
2023 |
|
|
|
|
2022 |
|
|
|
||
|
|
Amount |
|
|
|
|
Amount |
|
|
|
||
|
|
(Dollars in Millions) |
|
|||||||||
Total revenues: |
|
|
|
|
|
|
|
|
|
|
||
Building Materials business: |
|
|
|
|
|
|
|
|
|
|
||
East Group |
|
|
|
|
|
|
|
|
|
|
||
Aggregates |
|
$ |
530.1 |
|
|
|
|
$ |
419.2 |
|
|
|
Asphalt |
|
|
0.1 |
|
|
|
|
|
0.2 |
|
|
|
Less: Interproduct revenues |
|
|
(0.6 |
) |
|
|
|
|
(0.6 |
) |
|
|
East Group Total |
|
|
529.6 |
|
|
|
|
|
418.8 |
|
|
|
West Group |
|
|
|
|
|
|
|
|
|
|
||
Aggregates |
|
|
381.8 |
|
|
|
|
|
337.4 |
|
|
|
Cement |
|
|
168.6 |
|
|
|
|
|
138.3 |
|
|
|
Ready mixed concrete |
|
|
220.0 |
|
|
|
|
|
291.1 |
|
|
|
Asphalt and paving services |
|
|
57.9 |
|
|
|
|
|
56.6 |
|
|
|
Less: Interproduct revenues |
|
|
(87.2 |
) |
|
|
|
|
(88.4 |
) |
|
|
West Group Total |
|
|
741.1 |
|
|
|
|
|
735.0 |
|
|
|
Total Building Materials business |
|
|
1,270.7 |
|
|
|
|
|
1,153.8 |
|
|
|
Total Magnesia Specialties |
|
|
83.4 |
|
|
|
|
|
77.0 |
|
|
|
Total |
|
$ |
1,354.1 |
|
|
|
|
$ |
1,230.8 |
|
|
|
|
|
Three Months Ended March 31, |
|
|||||||||||||
|
|
2023 |
|
|
2022 |
|
||||||||||
|
|
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
||||
|
|
(Dollars in Millions) |
|
|||||||||||||
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Building Materials business: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Aggregates |
|
|
238.1 |
|
|
|
26.1 |
|
|
$ |
102.8 |
|
|
|
13.6 |
|
Cement |
|
|
47.1 |
|
|
|
28.0 |
|
|
|
26.9 |
|
|
|
19.4 |
|
Ready mixed concrete |
|
|
11.2 |
|
|
|
5.1 |
|
|
|
21.9 |
|
|
|
7.5 |
|
Asphalt and paving services |
|
|
(20.5 |
) |
|
|
(35.4 |
) |
|
|
(13.2 |
) |
|
|
(23.2 |
) |
Total Building Materials business |
|
|
275.9 |
|
|
|
21.7 |
|
|
|
138.4 |
|
|
|
12.0 |
|
Magnesia Specialties |
|
|
25.0 |
|
|
|
30.0 |
|
|
|
25.6 |
|
|
|
33.3 |
|
Corporate |
|
|
1.9 |
|
|
|
|
|
|
(7.9 |
) |
|
|
|
||
Total |
|
$ |
302.8 |
|
|
|
22.4 |
|
|
$ |
156.1 |
|
|
|
12.7 |
|
Page 24 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Building Materials Business
The following table presents shipments data by product line for the Building Materials business:
|
|
Three Months Ended March 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|||
|
|
(In Millions) |
|
|
|
|
||||||
Aggregates tons |
|
|
41.7 |
|
|
|
42.1 |
|
|
|
(0.8 |
)% |
Cement tons |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
(6.8 |
)% |
Ready Mixed Concrete cubic yards |
|
|
1.5 |
|
|
|
2.4 |
|
|
|
(37.1 |
)% |
Asphalt tons |
|
|
0.5 |
|
|
|
0.7 |
|
|
|
(25.1 |
)% |
The average selling price and pricing variances by product line for the Building Materials business are as follows:
|
|
Three Months Ended March 31, |
|
|||||||||
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|||
Aggregates (per ton) |
|
$ |
19.83 |
|
|
$ |
16.17 |
|
|
|
22.6 |
% |
Cement (per ton) |
|
$ |
170.65 |
|
|
$ |
129.11 |
|
|
|
32.2 |
% |
Ready Mixed Concrete (per cubic yard) |
|
$ |
145.06 |
|
|
$ |
120.71 |
|
|
|
20.2 |
% |
Asphalt (per ton) |
|
$ |
68.53 |
|
|
$ |
62.39 |
|
|
|
9.9 |
% |
First-quarter aggregates shipments decreased slightly, while pricing increased 22.6%, or 19.6% on a mix-adjusted basis, over the prior-year quarter, reflecting the impact of 2022 and 2023 price increases. First-quarter aggregates gross profit improved 131.7% to $238.1 million, while gross margin expanded 1,250 basis points to a first-quarter record of 26.1%, as strong pricing growth more than offset lower shipments and increased costs.
Cement shipments of 1.0 million tons decreased 6.8% driven by wet and cold weather in Texas. Pricing increased 32.2%, reflecting the cumulative effects of 2022 and 2023 price increases. Cement gross profit grew to a first-quarter record $47.1 million, an increase of 75.4%, and gross margin expanded 860 basis points to 28.0%, as pricing gains more than offset lower shipments and higher raw materials and maintenance costs.
Ready mix pricing increased 20.2% due to pricing actions implemented in all Arizona and Texas markets. Ready mix shipments, revenues and gross profit from continuing operations declined 37.1%, 24.4% and 48.9%, respectively, driven primarily by the divestiture of the Company’s Colorado and Central Texas ready mixed concrete businesses on April 1, 2022.
Total asphalt shipments decreased 25.1% and pricing increased 9.9%, respectively. Total asphalt and paving revenues increased 2.1%. However, consistent with the Company's historical first-quarter trends, the business posted a gross loss of $20.5 million due to seasonal winter operational shutdowns in Minnesota.
Aggregates End-Use Markets
While aggregates shipments to the infrastructure market decreased 1.3%, the value of state and local government highway, bridge and tunnel contract awards, a leading indicator for future demand, is meaningfully higher year-over-year. The infrastructure market accounted for 32% of first-quarter aggregates shipments.
Aggregates shipments to the nonresidential market increased 3.2%, driven by several large manufacturing, data center and energy projects in Georgia, the Carolinas and the Gulf Coast. The nonresidential market represented 38% of first-quarter aggregates shipments.
Page 25 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Aggregates shipments to the residential market decreased 2.6%, however, multi-family construction remained resilient, partially offsetting the single-family affordability concerns in the Company's geographies. The residential market accounted for 25% of first-quarter aggregates shipments.
The ChemRock/Rail market accounted for the remaining 5% of first-quarter aggregates shipments. Volumes to this end use decreased 14.5%, driven by primarily lower ballast shipments, but wet weather also negatively impacted aglime shipments.
Magnesia Specialties Business
Magnesia Specialties first-quarter total revenues increased 8.4% to $83.4 million, driven by increased lime demand as well as higher pricing for all product lines. Gross profit declined 2.7% to $25.0 million reflecting higher supplies and contract services costs.
Consolidated Operating Results
Consolidated SG&A for the first quarter of 2023 was 7.7% of total revenues compared with 7.9% in the prior-year quarter, a 20-basis-point improvement.
Among other items, other operating expense (income), net, includes gains and losses on the sale of assets; recoveries and losses related to certain customer accounts receivable; rental, royalty and services income; and accretion expense, depreciation expense and gains and losses related to asset retirement obligations. For the first quarter, consolidated other operating expenses (income), net, was an expense of $1.6 million in 2023 and income of $2.3 million in 2022.
Earnings from operations for the quarter were $196.1 million in 2023 compared with $59.9 million in 2022, with the increase driven by the cumulative impact of price increases in 2022 and 2023.
Other nonoperating income, net, includes interest income; pension and postretirement benefit cost (excluding service cost); foreign currency transaction gains and losses; equity earnings or losses from nonconsolidated affiliates; and other miscellaneous income and expenses. For the first quarter, other nonoperating income, net, was $16.1 million and $10.8 million in 2023 and 2022, respectively. The increase was driven by higher interest income.
Income Tax Expense
For the three months ended March 31, 2023 and 2022, the effective income tax rates for continuing operations were 20.9% and 19.3%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities for the three months ended March 31, 2023 and 2022 was $160.5 million and $169.9 million, respectively. Operating cash flow is substantially derived from consolidated net earnings before deducting depreciation, depletion and amortization, and changes in working capital requirements.
Depreciation, depletion and amortization were as follows:
Page 26 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in Millions) |
|
|||||
Depreciation |
|
$ |
100.7 |
|
|
$ |
101.8 |
|
Depletion |
|
|
9.4 |
|
|
|
11.8 |
|
Amortization |
|
|
13.5 |
|
|
|
14.6 |
|
Total |
|
$ |
123.6 |
|
|
$ |
128.2 |
|
The seasonal nature of construction activity impacts the Company’s interim operating cash flow when compared with the full year. Full-year 2022 net cash provided by operating activities was $991.2 million.
During the three months ended March 31, 2023 and 2022, the Company paid $173.9 million and $139.8 million, respectively, for property, plant and equipment.
The Company can repurchase its common stock through open-market purchases pursuant to authority granted by its Board of Directors or through private transactions at such prices and upon such terms as the Chief Executive Officer deems appropriate. The Company repurchased 203,770 shares of common stock at an aggregate cost of $75.0 million during the first three months of 2023. At March 31, 2023, 12.9 million shares of common stock remain under the Company’s repurchase authorization.
On September 29, 2022, the Company satisfied and discharged its $700 million of 0.650% Senior Notes due 2023 (the 2023 Notes). In connection with the satisfaction and discharge, the Company irrevocably deposited funds in an amount sufficient to satisfy all remaining principal and interest payments on the 2023 Notes with Regions Bank (the Trustee). The funds are invested in a fund that invests exclusively in U.S. Treasury securities and are classified as Restricted investments (to satisfy discharged debt and related interest) on the consolidated balance sheets at March 31, 2023 and December 31, 2022. Holders of the 2023 Notes will receive payment of principal on the scheduled maturity date and payment of interest at the per annum rate (and on the dates) set forth in the 2023 Notes indenture. The Company utilized existing cash resources to fund the satisfaction and discharge. As a result of the satisfaction and discharge, the obligations of the Company under the indenture with respect to the 2023 Notes have been terminated, except those provisions of the indenture that, by their terms, survive the satisfaction and discharge. The 2023 Notes remain on the Company’s consolidated balance sheet at March 31, 2023 and will continue to accrete to their par value over the period until maturity in July 2023.
The Company, through a wholly-owned special-purpose subsidiary, has a $400 million trade receivable securitization facility (the Trade Receivable Facility) that matures on September 20, 2023. The Trade Receivable Facility contains a cross-default provision to the Company’s other debt agreements.
The Company has an $800 million five-year senior unsecured revolving facility (the Revolving Facility), which matures in December 2027. The Revolving Facility requires the Company’s ratio of consolidated net debt-to-consolidated EBITDA, as defined, for the trailing-twelve-month period (the Ratio) to not exceed 3.50 times as of the end of any fiscal quarter, provided that the Company may exclude from the Ratio debt incurred in connection with certain acquisitions during the quarter or the three preceding quarters so long as the Ratio calculated without such exclusion does not exceed 4.00 times. Additionally, if there are no amounts outstanding under the Revolving Facility and the Trade Receivable Facility, consolidated debt, including debt for which the Company is a guarantor, shall be reduced in an amount equal to the lesser of $500.0 million or the sum of the Company’s unrestricted cash and temporary investments, for purposes of the covenant calculation. The Company was in compliance with the Ratio at March 31, 2023.
Page 27 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
In the event of a default on the Ratio, the lenders can terminate the Revolving Facility and Trade Receivable Facility and declare any outstanding balances as immediately due. There were no amounts outstanding under the Trade Receivable Facility or the Revolving Facility at March 31, 2023.
Cash on hand and restricted investments, along with the Company’s projected internal cash flows and availability of financing resources, including its access to debt and equity capital markets, is expected to continue to be sufficient to provide the capital resources necessary to support anticipated operating needs, cover debt service requirements, address near-term debt maturities, meet capital expenditures and discretionary investment needs, fund certain acquisition opportunities that may arise, allow for payment of dividends for the foreseeable future and allow the repurchase of shares of the Company’s common stock. At March 31, 2023, the Company had $1.20 billion of unused borrowing capacity under its Revolving Facility and Trade Receivable Facility, subject to complying with the related leverage covenant. Historically, the Company has successfully extended the maturity dates of these credit facilities.
TRENDS AND RISKS
The Company outlined the risks associated with its business in its Annual Report on Form 10-K for the year ended December 31, 2022. Management continues to evaluate its exposure to all operating risks on an ongoing basis.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on the Company’s current analysis of the provisions, management does not believe this legislation will have a material impact on the Company’s consolidated financial statements.
OTHER MATTERS
If you are interested in Martin Marietta stock, management recommends that, at a minimum, you read the Company’s current annual report and Forms 10-K, 10-Q and 8-K reports to the Securities and Exchange Commission (SEC) over the past year. The Company’s recent proxy statement for the annual meeting of shareholders also contains important information. These and other materials that have been filed with the SEC are accessible through the Company’s website at www.martinmarietta.com and are also available at the SEC’s website at www.sec.gov. You may also write or call the Company’s Corporate Secretary, who will provide copies of such reports.
Investors are cautioned that all statements in this Form 10-Q that relate to the future involve risks and uncertainties, and are based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. These statements, which are forward-looking statements under the Private Securities Litigation Reform Act of 1995, provide the investor with the Company’s expectations or forecasts of future events. You can identify these statements by the fact that they do not relate only to historical or current facts. They may use words such as “anticipate,” “may,” “expect,” “should,” “believe,” “project,” “intend,” “will,” and other words of similar meaning in connection with future events or future operating or financial performance. Any or all of management’s forward-looking statements here and in other publications may turn out to be wrong.
The Company’s outlook is subject to risks and uncertainties and is based on assumptions that the Company believes in good faith are reasonable but which may be materially different from actual results. Factors that the Company currently believes could cause actual results to differ materially from the forward-looking statements in this Form 10-Q include, but are not limited to: the ability of the Company to face challenges, including shipment declines resulting from economic events beyond the Company’s control; a widespread decline in aggregates pricing, including a decline in aggregates shipment volume negatively affecting aggregates price; the history of both cement and ready mixed concrete being subject to significant changes in supply, demand and price fluctuations; the termination, capping and/or reduction or
Page 28 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
suspension of the federal and/or state gasoline tax(es) or other revenue related to public construction; the level and timing of federal, state or local transportation or infrastructure or public projects funding, most particularly in Texas, Colorado, North Carolina, Minnesota, California, Georgia, Arizona, Iowa, Florida and Indiana; the United States Congress’ inability to reach agreement among themselves or with the Administration on policy issues that impact the federal budget; the ability of states and/or other entities to finance approved projects either with tax revenues or alternative financing structures; levels of construction spending in the markets the Company serves; a reduction in defense spending and the subsequent impact on construction activity on or near military bases; a decline in energy-related construction activity resulting from a sustained period of low global oil prices or changes in oil production patterns or capital spending in response to this decline, particularly in Texas and West Virginia; increasing residential mortgage rates and other factors that could result in a slowdown in residential construction; unfavorable weather conditions, particularly Atlantic Ocean, Pacific Ocean and Gulf of Mexico storm and hurricane activity, the late start to spring or the early onset of winter and the impact of a drought or excessive rainfall in the markets served by the Company, any of which can significantly affect production schedules, volumes, product and/or geographic mix and profitability; the volatility of fuel costs and energy, particularly diesel fuel, electricity, natural gas and the impact on the cost, or the availability generally, of other consumables, namely steel, explosives, tires and conveyor belts, and with respect to the Company’s Magnesia Specialties business, natural gas; continued increases in the cost of other repair and supply parts; construction labor shortages and/or supply chain challenges; unexpected equipment failures, unscheduled maintenance, industrial accident or other prolonged and/or significant disruption to production facilities; the resiliency and potential declines of the Company’s various construction end-use markets; the potential negative impacts of a resurgence of a global health crisis such as COVID-19 and its variants; increasing governmental regulation, including environmental laws and climate change regulations; transportation availability or a sustained reduction in capital investment by the railroads, notably the availability of railcars, locomotive power and the condition of rail infrastructure to move trains to supply the Company’s Texas, Colorado, Florida, Carolinas and the Gulf Coast markets, including the movement of essential dolomitic lime for magnesia chemicals to the Company’s plant in Manistee, Michigan and its customers; increased transportation costs, including increases from higher or fluctuating passed-through energy costs or fuel surcharges, and other costs to comply with tightening regulations, as well as higher volumes of rail and water shipments; availability of trucks and licensed drivers for transport of the Company’s materials; availability and cost of construction equipment in the United States; weakening in the steel industry markets served by the Company’s dolomitic lime products; potential impact on costs, supply chain or other matters relating to the conflict between Russia and Ukraine; trade disputes with one or more nations impacting the U.S. economy, including the impact of tariffs on the steel industry; unplanned changes in costs or realignment of customers that introduce volatility to earnings, including that of the Magnesia Specialties business that is running at capacity; proper functioning of information technology and automated operating systems to manage or support operations; inflation and its effect on both production and interest costs; the concentration of customers in construction markets and the increased risk of potential losses on customer receivables; the impact of the level of demand in the Company’s end-use markets, production levels and management of production costs on the operating leverage and therefore profitability of the Company; the possibility that the expected synergies from acquisitions will not be realized or will not be realized within the expected time period, including achieving anticipated profitability to maintain compliance with the Company’s leverage ratio debt covenant; changes in tax laws, the interpretation of such laws and/or administrative practices, including acquisitions and divestitures, that would increase the Company’s tax rate; violation of the Company’s debt covenant if price and/or volumes return to previous levels of instability; downward pressure on the Company’s common stock price and its impact on goodwill impairment evaluations; the possibility of a reduction of the Company’s credit rating to non-investment grade; and other risk factors listed from time to time found in the Company’s filings with the SEC.
You should consider these forward-looking statements in light of risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other periodic filings made with the SEC. All of the Company’s forward-looking statements should be considered in light of these factors. In addition, other risks and uncertainties not
Page 29 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
presently known to the Company or that the Company considers immaterial could affect the accuracy of its forward-looking statements, or adversely affect or be material to the Company. The Company assumes no obligation to update any such forward-looking statements.
Page 30 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
INVESTOR ACCESS TO COMPANY FILINGS
Shareholders may obtain, without charge, a copy of Martin Marietta’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission for the fiscal year ended December 31, 2022, by writing to:
Martin Marietta
Attn: Corporate Secretary
4123 Parklake Avenue
Raleigh, North Carolina 27612
Additionally, Martin Marietta’s Annual Report, press releases and filings with the Securities and Exchange Commission, including Forms 10-K, 10-Q, 8-K and 11-K, can generally be accessed via the Company’s website. Filings with the Securities and Exchange Commission accessed via the website are available through a link with the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Accordingly, access to such filings is available upon EDGAR placing the related document in its database. Investor relations contact information is as follows:
Telephone: (919) 510-4736
Website address: www.martinmarietta.com
Information included on the Company’s website is not incorporated into, or otherwise creates a part of, this report.
Page 31 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company’s operations are highly dependent upon the interest rate-sensitive construction and steelmaking industries. Consequently, these marketplaces could experience lower levels of economic activity in an environment of rising interest rates or escalating costs.
Management has considered the current economic environment and its potential impact to the Company's business. Demand for aggregates products, particularly in the infrastructure construction market, is affected by federal, state and local budget and deficit issues. Further, delays or cancellations of capital projects in the nonresidential and residential construction markets could occur if companies and consumers are unable to obtain affordable financing for construction projects or if consumer confidence is eroded by economic uncertainty.
Demand in the nonresidential and residential construction markets, which combined accounted for 63% of aggregates shipments for the three months ended March 31, 2023, is affected by interest rates. During the three months ended March 31, 2023, the Federal Reserve raised the target federal funds rate 50 basis points.
Aside from these inherent risks from within its operations, the Company’s earnings are also affected by changes in short-term interest rates and changes in enacted tax laws.
Variable-Rate Borrowing Facilities. At March 31, 2023, the Company had an $800.0 million Revolving Facility and a $400.0 million Trade Receivable Facility. Borrowings under these facilities bear interest at a variable interest rate. There were no borrowings outstanding on either facility at March 31, 2023. However, any future borrowings under the credit facilities or outstanding variable-rate debt are exposed to interest rate risk.
Pension Expense. The Company’s results of operations are affected by its pension expense. Assumptions that affect pension expense include the discount rate and, for the qualified defined benefit pension plan only, the expected long-term rate of return on assets. Therefore, the Company has interest rate risk associated with these factors. The impact of hypothetical changes in these assumptions on the Company’s annual pension expense is discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Income Tax. Any changes in enacted tax laws, rules or regulatory or judicial interpretations, or any change in the pronouncements relating to accounting for income taxes could materially impact the Company’s effective tax rate, tax payments, financial condition and results of operations.
Energy Costs. Energy costs, including diesel fuel, natural gas, electricity, coal, petroleum coke and liquid asphalt, represent significant production costs of the Company. The Company may be unable to pass along increases in the costs of energy to customers in the form of price increases for the Company’s products. The cement product line and Magnesia Specialties business each have varying fixed-price agreements for a portion of their 2023 energy requirements. A hypothetical 10% change in the Company’s energy prices in 2023 as compared with 2022, assuming constant volumes, would change 2023 energy expense by $50.0 million.
Commodity Risk. Cement is a commodity and competition is based principally on price, which is highly sensitive to changes in supply and demand. Prices are often subject to material changes in response to relatively minor fluctuations in supply and demand, general economic conditions and other market conditions beyond the Company’s control. Increases in the production capacity of industry participants or increases in cement imports tend to create an oversupply of such products leading to an imbalance between supply and demand, which can have a negative impact on product prices. There can be no assurance that product prices will not decline in the future or that such declines will not have a material adverse effect on the Company’s business, financial condition and results of operations. Assuming full-year 2022 cement product revenues of $602.3 million, a hypothetical 10% change in the average selling price of the cement product line would impact full-year cement product revenues by $60.2 million.
Cement is a key raw material in the production of ready mixed concrete. The Company may be unable to pass along increases in the costs of cement and raw materials to customers in the form of price increases for the Company’s products.
Page 32 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
(Continued)
A hypothetical 10% change in cement costs in 2023 compared with 2022, assuming constant volumes, would change the ready mixed concrete product line cost of sales by $26.2 million. While increases in cement pricing may negatively impact the profitability of the ready mixed concrete operations, the cement business would benefit, although the positive impact may not reflect a direct correlation to the impact on the ready mixed concrete business.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. As of March 31, 2023, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and the operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2023. There were no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Page 33 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 8 Commitments and Contingencies, Legal and Administrative Proceedings, of this Form 10-Q.
Item 1A. Risk Factors.
Reference is made to Part I. Item 1A. Risk Factors and Forward-Looking Statements of the Martin Marietta Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
|
|
|
|
|
|
Total Number of Shares |
|
|
Maximum Number of |
|
||||
|
|
|
|
|
|
|
|
Purchased as Part of |
|
|
Shares that May Yet |
|
||||
|
|
Total Number of |
|
|
Average Price |
|
|
Publicly Announced |
|
|
be Purchased Under |
|
||||
Period |
|
Shares Purchased |
|
|
Paid per Share |
|
|
Plans or Programs |
|
|
the Plans or Programs |
|
||||
January 1, 2023 - January 31, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
13,102,616 |
|
February 1, 2023 - February 28, 2023 |
|
|
203,770 |
|
|
$ |
368.06 |
|
|
|
203,770 |
|
|
|
12,898,846 |
|
March 1, 2023 - March 31, 2023 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
12,898,846 |
|
Total |
|
|
203,770 |
|
|
|
|
|
|
203,770 |
|
|
|
|
||
Reference is made to the press release dated February 10, 2015 for the December 31, 2014 fourth-quarter and full-year results and announcement of the share repurchase program. The Company’s Board of Directors authorized a maximum of 20 million shares to be repurchased under the program. The program does not have an expiration date.
Item 4. Mine Safety Disclosures.
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.
Page 34 of 36
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended March 31, 2023
PART II. OTHER INFORMATION
(Continued)
Item 6. Exhibits.
Exhibit No. |
|
Document |
|
|
|
|
|
|
|
Certification dated May 4, 2023 of Chief Executive Officer pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
Certification dated May 4, 2023 of Chief Financial Officer pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
Written Statement dated May 4, 2023 of Chief Executive Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
Written Statement dated May 4, 2023 of Chief Financial Officer required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
Mine Safety Disclosures |
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
Page 35 of 36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
MARTIN MARIETTA MATERIALS, INC. |
|
|
|
(Registrant) |
|
|
|
|
Date: May 4, 2023 |
By: |
|
/s/ James A. J. Nickolas |
|
|
|
James A. J. Nickolas |
|
|
|
Senior Vice President and |
|
|
|
Chief Financial Officer |
Page 36 of 36